Page 44 - The Indian EYE 051322

BUSINESS EYE MAY 13, 2022 | The Indian Eye 44

Initial Public Offering of LIC

a boon for retail investors as Moody’s

sees it as credit positive

Benefits will likely remain limited until the government sells a larger stake,

allowing external investors to build a more strategic stake in the company, says ratings firm

OUR BUREAU
per cent foreign direct investment
Mumbai limit is much higher than the 20 per
cent allowed in LIC. Many global
he initial public offering (IPO) companies already present in India
of Life Insurance Corporation
Tof India (LIC) has been sub- through joint ventures may increase
their ownership stakes in their local
scribed 1.03 times till the second day
of bidding on Thursday. Policyhold- affiliates.
The price band of LIC IPO has
ers and employees, who are offered been fixed at Rs 902-949 per share
discounts, are driving the subscrip- and the government aims to raise
tions. The policyholders’ portion has over Rs 21,000 crore by selling over
been subscribed 3.11 times. The em- 22.13 crore shares or 3.5 per cent of
ployees’ portion has been subscribed
2.21 times. The country’s largest IPO its stake. Stock market experts are
bullish on the IPO and the grey mar-
opened for subscription on Wednes- ket is also giving positive signals.
day and will close on May 9.
Ravi Singh, Head of Research,
Share India, said in the grey mar-
LIC has set its price band for the ket LIC IPO is trading at around Rs

Initial Public Offer (IPO) at Rs MR Kumar, Chairperson of LIC, Tuhin Kanta Pandey, Secretary DIPAM, and other dignitaries at 1200-1250 which is around 25 to 30
per cent higher than the issue price.
902 to Rs 949 per equity share. the recent announcement of LIC IPO launch in Mumbai (ANI Photo) This is giving confidence to the retail
Policyholders are offered a dis- investors to invest in LIC IPO. Singh
ny, LIC will face more demanding LIC complies with the Insurance said anchor investors have already
count of Rs 60 per equity share, disclosure requirements, resulting in Regulatory and Development Au- invested Rs 5,620 crore in LIC IPO.
while retail investors and em- increased transparency over its oper- thority of India’s (IRDAI’s) solvency There is also a discount for retail
requirements, its capital adequacy is
investors and policyholders. Retail
ations, and encouraging it to priori-
ployees are offered a dis- tize profitability, underwriting, and weaker than that of global life insur- investors and employees to get the
count of Rs 45 on each share. risk management. This will, in turn, ance peers. LIC’s shareholders’ equi- benefit of 5 per cent and policyhold-
boost its capacity to generate and ty accounts for less than 1 per cent ers will get the benefit of 7 per cent.
grow capital internally. of total assets, compared with, for ex- D K Mishra, a stock market ex-
Retail investors have subscribed
Additionally, their influence
93 per cent of the shares reserved. could aid operational and distribu- ample, 4.9 per cent for Ping An Life pert, said the LIC IPO price band is
good where the subscription is going
Insurance Company of China, Ltd.
However, there has been a muted re- tion efficiencies, for example, by en- The country’s privately owned to be very good. “If you see the size
sponse in the non-institutional cate-
gory. Non-institutional category that couraging LIC, whose online distri- insurers have already been preparing of the LIC market coverage, LIC has
for the prospect of future profitable
captured around 65 per cent market
bution is currently limited to its own
consists of corporates, individuals,
and others has witnessed less than 50 portal, to negotiate wider online dis- growth opportunities, as premium share of the total life insurance poli-
growth continues alongside the gov-
tribution agreements with third par-
cies of this country.”
per cent subscription so far. ties. This would support LIC’s sales ernment reforms of state-owned “They have got a huge network of
Examining the impact of India’s
state-owned Life Insurance Corpo- growth, given the increasing impor- insurers (which include LIC’s IPO). nearly 3,500 branches or satellite of-
ration’s IPO Moody’s Investors Ser- tance of digital distribution in the life In FY 2020, 4 of the 24 life insurers fice and they have got a huge number
of agency agents employed approxi-
raised capital, and more such trans-
industry, and the greater geographic
vice on Thursday said that the public reach of online sales, it said. actions are expected, as well as more mately 13.5 lakhs agents are working
issue is credit positive for India’s life However, these benefits will M&A deals and IPOs. These will im- for the LIC and overall asset size is
insurance sector. likely remain somewhat limited until prove the Indian insurance sector’s quite huge,” he said.
LIC IPO, which hit the market
Mishra said retail investors who
on Wednesday, will remain open till the government sells a larger stake, capital adequacy and financial flexi- are interested in the equity market
allowing external investors to build a
bility in the months ahead.
May 9. By 10:30 am on Thursday, more strategic stake in the company, Moody’s also expects foreign and who are willing to go into the
LIC IPO was subscribed 71 per cent. said Moody’s. insurers to continue investing in In- real earnings share market it is a
Moody’s said, as a listed compa-
According to Moody’s, while dia’s private insurers where the 49 good opportunity for them to invest.
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